“The task is similar to the existing agreement on policy objectives and recognizes the role that monetary policy plays in promoting the well-being of New Zealanders, ensuring that inflation remains low and stable and supporting maximum sustainable employment,” said Adrian Orr. It should be noted that, unlike a number of other central banks whose monetary interest rates have fallen from almost zero (or lower) and which cannot lower interest rates further to further ease monetary policy, the official cash reserve bank rate remains at a level (1.75%) monetary policy if conditions require it. In a speech in early March 2017, the governor of the reserve bank stated that “risks associated with future OCR movements are considered to be weighted in the same way.”  The first EPA was signed in March 1990 between Finance Minister Hon David Caygill and Reserve Bank Governor Dr Don Brash. It has set a target of achieving an annual inflation rate of 0 to 2% by the end of December 1992. This deadline was extended by one year in December 1990 in the PTA signed between the Governor and Finance Minister Ruth Richardson. 1 to 3 per cent, the Bank`s monetary policy aimed at keeping inflation at the 2% target. The table below shows the inflation targets of other central banks, with which each bank decides to tighten or ease monetary policy.  Dr. John McDermott, Deputy Governor “How the Bank formulated and evaluated its monetary policy decisions” (Speech at the Manawatu Chamber of Commerce in Palmerston North, July 13, 2016).
The new mission, the Charter and the MPC complete Phase 1 of the Review of the Reserve Bank Act. The contract is normally awarded by the Minister of Finance to mediterranean partner countries, a new body that formulates monetary policy through decisions such as the amount of the official cash rate. The Charter is generally agreed between the Minister of Finance and the Mediterranean partner countries. As part of the transition to the new monetary policy framework, the first mandate and charter will be agreed between the Minister and the Governor. As part of the mission signed today, the reserve bank`s monetary policy operation is as follows: in a 2012 report, the Ministry of Finance stated that short-term monetary policy was aimed at flattening demand fluctuations and that monetary policy was effective in the long term for … The clarity of real price signals through the search for global price stability.”  This activity is called the inflation target in which the reserve bank tightens or relaxes monetary policy in line with economic conditions in the economy, in order to keep annual inflation close to a target point or target area. The Reserve Bank was at the forefront of the fight against inflation in the late 1980s and was the first central bank to adopt a formal inflation target.  It is possible to have the same nominal rate of GDP growth, with a low annual inflation rate, as well as a high rate of real GDP growth, as it occurs with a high annual inflation rate and low GDP growth in volume terms. Under the nominal GDP stance, the monetary policy framework should be similar among the various announcements in Table 2, as the total nominal rate of GDP is the same (i.e. 5%).
In accordance with the law, the authorized minister (usually the Minister of Finance) must sign a EPZ with the governor of the reserve bank before any appointment or reconsignation of a governor. Political objectives can also be reviewed or changed at any time. In a 2002 speech in which he reflected on 14 years of an inflation target in New Zealand, the governor of the Reserve Bank at the time, Dr. Don Brash, said that the law and the PTA that accompanied him to the Governor “… independence of the instruments, but not the total independence of the target.”  Michelle Lewis, John McDermott and Adam Richardson “Anticipating Inflation and the Conduct of Monetary Policy in New Zealand” (2016) 79 (4) Reserve Bank Bulletin at 3.